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(Bloomberg Opinion) – Singapore is Asia, the Monte Carlo, a playground for the wealthiest. The city-state has two casinos, an annual Formula One race and the third highest concentration of ultra-wealthy individuals after Monaco and Geneva. This is not only the "Crazy Rich Asians" caricaturized in the film of the same name, but also, more and more, the Brazilian and British billionaires.
Even the haves of the recent hustle and bustle of Hong Kong are beginning to find that the rival financial center is a safer option for their money (if it is not yet their case). This is why it is all the more surprising that in the last five years, Singapore's expenditures have largely come from those at the bottom of the economic pyramid, while bankers who drive condominiums and the Earth elites have been relatively economical.
Consumption patterns are influenced by cross-technology trends, changing tastes, government policies, sluggish global growth and low long-term interest rates. Spending fluctuations in Singapore will not only shape the local retail landscape, they will also inform the debate on issues ranging from unrest in Hong Kong to a universal basic income as a tool to fight inequality.
Between 2013 and 2018, people living in social housing with one or two rooms increased their monthly expenses by 3.7% on average, while families living in private apartments saw their expenses decrease by 0.1%. Households living on land holdings, which spent an average of 5% more each year on average between 2008 and 2013, have tightened the stock exchange chains to only 0.2%. Per person, the trend is the same. The same is true for the badysis of expenditures by income group rather than by type of housing.
The results were released last week as part of the Statistics Department's Household Expenditure Survey, a detailed survey conducted every five years. But why is Singapore rich in hibernation as the mbades spend their income boldly?
The government study covers a period in which Internet connectivity doubled to 45% among households living in the smaller units offered by the Social Housing Agency. It's not surprising that overall expenses spent on a number of things – from digital cameras to owning a car – have gone down. Spending on clothing and footwear, as well as leisure, has been stagnant for 10 years. The telephone cameras were upgraded and made the digital cameras redundant; In a city where the compulsory certification of the right to own a car is often more expensive than the vehicle itself, mobile phone applications are a blessing. Cheap online substitutes have emerged for shopping and entertainment. Since the arrival of the video Netflix and Amazon Prime, the number of pay-TV subscribers telco StarHub Ltd. looks like this:
The technology democratizing consumption is part of a global scheme. As my colleague Shuli Ren wrote in China, the increasingly coveted portfolios belong to the working clbad consumers of cities ranked at level 3 and below. These consumers prefer to shop at sites like Pinduoduo, where everything is available at a reduced price. In Singapore, retail is also an important category in the real estate market. Generation Z – born after 2000 – will not be a mall rat, which has implications for real estate investment trusts.
The impact of low global growth and low interest rates is visible in the consumption gap. In 2008, each member of the richest 20% of households spent $ 2,171 ($ 1,577); his counterpart in the poorest 20 percent of families spent $ 574. Figures for 2018 are $ 2,945 S and $ 942 S respectively. The gap was reduced to 3 to 1, from almost 4 to 1.
Annual revenue growth, including investment returns, slowed to stand at 2.4% for all families between 2013 and 2018, after 5.3% in the previous survey. But it seems that the more affluent get extra satisfaction by spending a little more than before, while the less fortunate need to open their wallets much more widely. This is partly because 6.8% of the consumption of the highest paid people is online, compared to only 2.6% for the lowest paid people. Negative global interest rates may be bad news for the rentier clbades, but the very low inflation or deflation that makes them inevitable helps the rich more than the mbades.
However, Singapore is also showing how to combat this "secular stagnation", a persistent global slowdown that does not respond to easy money. In the 2011 elections, voters expressed frustration over crowded subway trains and outages and the government spent billions of dollars to improve the network and subsidize operating losses. Reliability has increased seven-fold since 2015 and residents now spend 2.6 percentage points less than their monthly transportation budget compared to a decade ago. The savings appear to have led to higher housing costs, but this weighs heavily on the expatriates who rent. Since most Singaporeans own their homes, a rise in rents charged to owner-occupied dwellings improves their housing wealth. New subway lines approaching their homes further reinforce this trend.
Hong Kong, on the other hand, is too attached to free markets to create for its mbades a wealth of housing and pensions run by the state. The anger provoked by the recent anti-government protests, apparently because of an extradition bill, is fueled by the anguish of not having enough votes to force the local administration to tackle such problems.
The other message from Singapore could have a more global resonance: how to deal with growing income inequality, a problem common to developed countries. Giving everyone $ 1,000 a month, as advocated by the Democratic presidential candidate in the United States, Andrew Yang, may not be the best solution. Re-directing taxes paid by the rich to the poor in the form of salary supplements, targeted subsidies, vouchers and some free cash can yield better results.
Singapore has granted S $ 10,347 to each inhabitant of a one or two-room apartment during these tax transfers. Income inequality is lower than before the 2008 crisis, which shows that fiscal policy can fight secular stagnation, even if monetary policy is powerless. Wealthy people will continue to make waves, as when billionaire vacuum cleaner James Dyson bought a $ 73.8 million penthouse, the most expensive in Singapore's history. But it's the silent buzz of cash registers in hawker centers that is more revealing now.
To contact the author of this story: Andy Mukherjee at [email protected]
To contact the editor responsible for this story: Patrick McDowell at [email protected]
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He was previously a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.
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